Medical loans are a type of personal loan used specifically for health-related expenses. In general, medical loans are unsecured loans that don't require collateral. They are usually offered by online lenders, although some traditional banks and credit unions also offer medical loans. Medical loans are offered by a large number of private lenders.
The application process is much like applying for any type of credit, except that the lender may be more flexible in analyzing your credit score or previous credit history than with other types of loans. The precise factors will vary depending on the lender. A major disadvantage of medical loans is that they tend to have high interest rates. There are several options for medical funding.
Personal medical loans are available online and at local lending institutions. Also called signature loans, unsecured loans allow you to borrow money without putting in collateral. Interest rates are usually fixed, with a repayment period of two to three years or more. If you can't pay your medical bill, talk to your medical provider and try to negotiate the bill based on your financial needs and ask for a payment plan.
Most personal loans are unsecured, meaning you won't need any type of collateral to qualify for funding. If you open one of these accounts, you can charge your medical bills and not pay any interest on them, as long as you cancel them before the end of the 0% period. If your doctor's office isn't willing to work with you on a payment plan and you really need to finance your health care, another option is a medical credit card. A SingleCare study revealed that, of those surveyed with medical debt, 53% developed a flexible payment plan with a provider.
One of the downsides of unsecured medical loans is that you usually need good or excellent credit to qualify. Longer repayment periods mean lower monthly promissory notes, but you'll pay more interest over the life of the loan. In general, consider applying for a medical loan if you've exhausted all other low-cost or interest-free financing options and need a way to get out of high-interest medical debt or finance living costs during your recovery. Lenders will weigh factors, such as your credit score and history, income and debt-to-income ratio, to determine if you are eligible to apply for a loan.
Instead of skipping a medical procedure, you can spread the cost of this treatment over a set number of years, allowing you to have a monthly payment that fits your budget. Medical loans are just one of your options, and they can have a big impact on your finances and the health care you can afford. Some people may also choose a medical loan when they're not sure if their health insurance plan will cover (or fully cover) a procedure. For Americans with less flexible repayment options, medical loans may be the best payment option and a way to avoid the medical bankruptcy that 535,000 families file each year.
Medical loans can be used to cover a wide range of health care costs that standard insurance plans may not fully cover. If you're not an expert in this area and most of us, in fact, aren't, you might consider hiring a medical billing advisor.